This week’s Amazon Prime sale will be one of the biggest shopping days of the year—but the online retail giant could still be anticipating bad news from shareholders.
Key Details
- This year’s two-day Prime Day sale began Tuesday morning and will continue through Wednesday, July 12, in 24 countries.
- Shoppers are expected to spend nearly $13 billion, an increase of 11% from last year’s sales, Bloomberg reports.
- However, shareholders may back off of Amazon later this week following the sale, as declining growth and lower Amazon Prime subscriptions may suggest the sale is losing steam.
- Amazon Prime has reportedly decreased from 170 million subscribers in 2021 to 168 million, meaning the company is struggling to generate new subscriber growth, according to Consumer Intelligence Research Partners.
- The company has already shifted gears toward a more international focus, pushing this year’s Prime Day as the most geographically sizable yet with the most number of countries participating, Axios notes.
- Amazon stock is currently up 1.3% from yesterday’s market close.
Why It’s Important
Prime Day grew annually between 2015 and 2020, with its 2020 sales marking 30% year-over-year growth. However, growth has slowed in the past three years, and stock prices have fallen during the week of every Prime Day since 2019. More investor interest at the moment is moving toward Amazon Web Services, which posted revenues of $5.1 billion in the first quarter of this year and is benefitting from artificial intelligence buzz, compared to the moderately stalled e-retailer part of the company, The Daily Upside reports.
It remains to be seen how this year’s Prime Day will boost the business. The company generally hosts a wrap-up event after Prime Day, but Amazon does not publicly post numbers and statistics from the yearly sale. Regardless, event sales for this week are likely to have a significant effect on the retail arm of the company going forward and affect shareholders for the duration of the week.
Backing Up A Bit
Prime Day is not important for Amazon in terms of raw sales but in terms of attracting new signups to Amazon Prime. A Bank of America study found that Prime subscribers spend four times as much money than non-Prime users and that membership fees are among Amazon’s most dependable revenue, Axios reports.
42% of Amazon shoppers say Prime Day deals are a leading reason why they subscribe to Amazon Prime, according to Prosper Insights and Analytics.
Key Takeaways
Part of the problem with user enthusiasm may be that the two-day sale is aggressive, with hot items flying off the virtual shelves in the first seconds of the sale and necessitating vigilance from savvy buyers looking for discounts. Amazon has experimented with a lottery “invite-only” promotion this year as a way to curb the problem, allowing shoppers to request invites for specific items and sending them confirmation email links through the sale, Bloomberg notes.
